State of the Gaming Industry

1. State of the Gaming Industry Presentation byFrank J. Fahrenkopf, Jr.President and CEOAmerican Gaming Association East Coast Gaming Congress May 24, 2010

2. 2009 Review: A Valued Partner AGA’s 2010 State of the States was released earlier this month and reveals many of the benefits casinos bring to communities. In 2009, despite the recession, commercial casinos: • Employed more than 328,000 people who earned $13.1 billion in wages • Paid almost $5.6 billion in direct gaming taxes to states and communities

3. An Unprecedented Time Past two years have been some of the most difficult in our industry’s history • Gaming revenues in 2009 were $30.74 billion – a 5.5 percent drop from 2008, which was a 4.7 percent drop from 2007 • Atlantic City operating profits dropped 25 percent in the first quarter of 2010 • Consumer spending on gaming and leisure travel dropped significantly • Credit markets seized up as many capital expansion projects got underway, forcing many to be scaled back or cancelled (Echelon, Las Vegas; proposed Pinnacle property in Atlantic City) • Economic difficulties caused many companies not to bid on expansion opportunities (Md., Kan.)

4. 2009 Review: Positive Results Some markets saw revenues increase as a result of new properties or changes to gaming laws New properties • Pennsylvania – Revenues up 21.6 percent, driven by new properties in Pittsburgh and Bethlehem • Indiana – 2009 was the first full year of operations for two properties (Hoosier Park, Indiana Live) ; revenue up 4.9 percent Revised gaming laws • Colorado – Revenues up 2.6 percent after expanding hours, raising the bet limit and adding new games • Missouri – Eliminated loss limit; revenues up 2.9 percent

5. 2009 Review: Racinos Remain Strong The racino sector continued to grow in 2009 • Gross gaming revenues increased 5 percent to $6.40 billion • Racinos paid more than $2.6 billion in direct gaming taxes, a 1.2 percent increase over 2008 • Racino employment stayed steady with more than 29,000 people

6. 2009 Review: Equipment Manufacturers • $12.1 billion in direct economic output, a 4.7 percent decrease from 2008 • 30,000 jobs, an increase of 1.4 percent from last year • $2.1 billion in wages, an increase of 5 percent compared to 2008 Gaming equipment manufacturers also have struggled in the recession, but made vital contributions:

7. 2009 Review: East Coast • Gaming Revenues • New Jersey: $3.943 billion (-13.3 percent) • Pennsylvania: $1.965 billion (+21.6 percent) • Connecticut: $1.448 billion (-7.8 percent) • New York: $1.019 billion (+7.6 percent) • Delaware: $564.2 million (-4.2 percent) • Tax Contributions • New Jersey: $347.62 million (-18.6 percent) • Pennsylvania: $929.04 million (+21.2 percent) • New York: $455.48 million (+2.1 percent) • Delaware: $227.55 million (+8.1 percent)

8. 2009 Review: East Coast • Employment • New Jersey: 36,377 (-5.7 percent) • Pennsylvania: 9,126 (+55.5 percent) • New York: 3,180 (-6.8 percent) • Delaware: 2,363 (-8.5 percent)

9. 2009 Review: East Coast • Clear evidence that gaming expansion has cut into the revenues of existing markets • Pennsylvania’s growing industry has led to declines in Atlantic City and Delaware • New York’s success has affected Connecticut and Atlantic City

10. Turning the Corner? • Beginning to come out of the recession • 1st quarter national revenues were flat, down only 0.2 percent • Atlantic City – April revenue down only 0.7 percent • Compared to declines of 9.8 percent, 8.5 percent, 15.7 percent and 5.6 percent in December, January, February and March, respectively • Optimistic signs from Nevada • Las Vegas Strip up 2.4 percent; Reno up 4.6 percent; and South Shore Lake Tahoe up 7.2 percent in March • MGM MIRAGE reports that convention and booking rates are on the upswing • Las Vegas Sands announced a $2.50 quarterly dividend • Las Vegas visitor volume is up 1.5 percent 2010 YTD

11. First Quarter Comparisons

12. Expansion on the Horizon • Entering a period of expansion in the East, especially in the mid-Atlantic • Table games in Pennsylvania, Delaware and Charles Town, W.Va. • Casinos in Maryland, Ohio, Aqueduct (Queens, N.Y.) • Possible expansion in Massachusetts, New Hampshire • Existing markets must adapt

13. Public Perceptions of Gaming Entertainment • Public opinion polling released in State of the States • Consisted of phone interviews conducted with 804 adult (age 21+) Americans from Feb. 10-17 • Polling found that acceptance of casino gambling remains high 81 percent of Americans view casino gaming as acceptable for themselves or others

14. Public Perceptions of Gaming Entertainment Polling also revealed that that • Casino gaming is a good value Nearly three-quarters (73 percent) of those polled think that going to a casino for an evening out is a good value compared to other entertainment options • 36 percent of survey respondents see job creation as the most important benefit of casinos, 21 percent say taxes • 28 percent of Americans visited a casino during 2009, up from 25 percent in 2008

15. Poll of Casino County Residents A 2010 poll of 304 casino county residents nationwide found that: • 42 percent have visited a casino to gamble in the past year • 64 percent describe the impact of casinos on their community as very or somewhat positive • 68 percent would vote “yes” on a referendum on keeping casino gaming

16. Spotlight on Gaming Machines • In 2009, there were nearly 833,000 gaming machines in 38 states • Nevada has the most with 191,110, followed by California and Oklahoma • New Jersey – 30,782 • Pennsylvania – 24,754 • Delaware – 7,532 • All commercial casino states get at least 65 percent of their gaming revenue from machines (N.J. – 69 percent) • 59 percent of survey respondents say slots are their favorite game • 49 percent say they prefer slots because they don’t feel embarrassed or pressured when playing

17. Casino Visitation • Casino gambling (28 percent participation) was the second most popular form of gambling for survey respondents, behind only the lottery (46 percent participation) • Approximately 61.7 million casino visitors • Of those who visited casinos: • 50 percent visited local casinos for a few hours at a time • 13 percent took long-distance trips to gambling destinations • 23 percent visited both local and destination casinos • 10 percent took one- or two-night trips to local casinos

18. Not Just Gambling When visiting a casino during the past year • 75 percent ate at a fine dining restaurant • 60 percent saw a show, concert or other live entertainment event • 48 percent visited a bar or club • 41 percent went shopping • 35 percent used recreational facilities, such as a spa, pool, fitness area or golf course

19. Spotlight on Poker • 15 percent of survey respondents reported playing poker in 2009 • Highest percentage since 2003 and 2004, the height of the “poker boom” • New Jersey’s 2009 poker revenue – $78.1 million • Poker revenues are more resilient than overall gaming revenues • The 5.2 percent decline in N.J. poker revenues compared with 2008 was considerably smaller than the 13.3 percent drop overall gaming revenues

20. Global Gaming Developments • Asia • Macau • Continues to set revenue records ($1.76 billion in April); expansion has resumed on Cotai Strip properties • 65 percent of Wynn Resorts’ revenue • 80 percent of Las Vegas Sands’ revenue in first quarter • Singapore • Two new integrated resorts – Marina Bay Sands, Resorts World Sentosa (Genting) • Genting: 1st quarter results – 46-day period of operations, property generated revenues of $242.5 million, EBITDA of $78.9 million (33% EBITDA margin) and $5.3 million/day • Development underway in Vietnam • Other countries considering expansion • G2E Asia 2010 – June 8-10 at the Venetian Macao • Mexico and South America; Europe

21. Federal Issues – Internet Gambling Current Pending Legislation • The Internet Gambling Regulation Consumer Protection and Enforcement Act (H.R. 2267) – Introduced by Rep. Frank (D-Mass.), the bill would establish a federal regulatory and enforcement framework for Internet gambling operations • Internet Gambling Regulation and Tax Enforcement Act of 2009 (H.R. 2268) – Introduced by Rep. McDermott (D-Wash.), this companion bill to H.R. 2267 would establish a system of taxation for Internet gambling operations. Under the legislation, licensed operators would pay a two percent tax on all deposits • Internet Poker and Games of Skill Regulation, Consumer Protection, Enforcement Act of 2009 (S. 1597) – Introduced by Sen. Robert Menendez (D-N.J.), it would legalize and regulate games of skill on the Internet, also known as the “poker carve-out bill” • The Bipartisan Tax Fairness and Simplification Act of 2010 (S. 3018)Introduced by Sens. Wyden (D-Ore.) and Gregg (R-N.H.), the bill would, among its many provisions, use taxes and licensing fees on Internet gambling as a federal revenue generator 

22. Federal Issues – Internet Gambling AGA Position • The technology now exists to properly regulate Internet gambling with appropriate law enforcement oversight and to provide appropriate consumer protections for individuals gambling online.  • A properly regulated legal framework for Internet gambling is the best way to protect consumers. • Online gambling operators and suppliers should be held to the same level of probity to which AGA members adhere in their traditional land-based operations.  • The AGA will continue to put any legislative proposal through three tests: • Must not create competitive advantages or disadvantages • No form of gambling currently legal shall be made illegal • Must respect states’ rights • The AGA remains neutral on all existing legislation being considered • SEN. HARRY REID?????

23. Federal Issues – Financial Regulation Restoring American Financial Stability Act of 2010 (Financial Reform Bill; S. 3217) • Among other provisions, would create new Consumer Financial Protection Bureau (CFPB) to regulate entities that extend credit, service loans, engage in deposit-taking activities or otherwise act as custodian of consumer funds • Some questions raised about whether the gaming industry might be subject to oversight by CFPB • The AGA has reviewed the bill and does not think it applies to the industry; Sen. Reid’s office has concurred

24. Where Do We Go From Here? • Atlantic City • Facing a tremendous challenge in a new competitive environment • Needs strong leadership • Tough decisions will have to be made • Pennsylvania and Delaware • Transition from slots parlors to full-service casinos • Sports Wagering • Delaware and N.J. litigation • In the gaming industry, you must innovate or get left behind, no matter where you’re operating

25. 2010 State of the States 2010 State of the States: The AGA Survey of Casino Entertainment was released this month and is available for download at www.americangaming.org